Amazon and Target offer free shipping for the holidays — why it’s more appealing than discounts

Amazon said this week that it will start offering free shipping with no minimum $25 purchase to all U.S. customers throughout the holiday season. Previously, only subscribers to Amazon Prime, which pay $119 per year, were eligible for free shipping.

The announcement comes days after Target

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began its free holiday shipping program and marks the start of the holiday season free shipping offers by retailers. (Amazon did not immediately respond to request for comment.)

Don’t miss: With free-shipping perk, Amazon’s 2018 shipping burden on track to top the $21.7 billion spent in 2017

Consumer Intelligence Research Partners released a report last year that found the estimated 100 million-plus U.S.-based Amazon Prime

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users spend $1,300 per year on purchases on the site, more than double the $700 for non-Prime members. That may be because Prime members can afford to pay $119 per year for membership, but also like to shop when they know they don’t have to pay for shipping.

Free shipping is a big incentive for click-happy consumers. Nine out of 10 people said free shipping was the No. 1 reason for shopping online more often.

Free shipping is a big incentive for click-happy consumers. Nine out of 10 people said free shipping was the No. 1 reason for shopping online more often, according to the Walker Sands Future of Retail Report. And roughly half said they felt same-day shipping was a reason for shopping more online.

What’s more, another study by marketing company Retention Science concluded that people actually choose free shipping over a dollar discount. They may see it as a more lucrative perk and it makes their online shopping experience more seamless, just like “one-click” shopping.

Also see: What Amazon’s HQ2 will mean for house prices

Of course, it works both ways. People who only intend on spending a few dollars may have been tempted to buy more things to bring their final tally to $25 in order to qualify for free shipping. With no minimum requirement, those shoppers won’t have to pay extra to ship purchases below $25.

Tom Caporaso, CEO of Clarus Commerce, a company that works with companies on premium loyalty programs, summed up the power of free shipping as something that “combines the power of satisfying a universal want (something for nothing) with the power of satisfying a universal demand (free deliveries).”

In other words, free shipping has an appeal that dollar discounts don’t have: Amazon’s latest bid for more customers contains the word “free.”

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Quentin Fottrell is MarketWatch’s personal-finance editor and The Moneyist columnist for MarketWatch. You can follow him on Twitter @quantanamo.